How to Build Credit

Updated on November 28, 2023

For many new residents of the United States, building credit is an essential aspect of securing your financial future. Credit is used in many financial decisions, and one should start building credit as soon as they can.

Since credit can be a complicated topic, we’ve put together this guide on helping you begin building credit. Here you will find everything you need to know on what credit is, and how you can begin building your own credit.

What is credit?

Credit is money that you borrow from a grantor, which you agree to pay back at an agreed-upon time. In order to receive this money from grantors, the lender will often use your credit score to determine your financial responsibility and your likelihood of paying back the money within the agreed upon time. When talking about financial topics, most people refer to a credit score simply as credit.

What is a good credit score?

A credit score of 700 or above is generally considered good credit. Credit scores have a range between 300 and 850, and most people have credit scores that fall between 600 and 750.

Higher scores show that you are likely to make better credit decisions and will make creditors more confident that you will pay back any future debts. Bad credit scores can make credit lenders less likely to lend money to you, or they will charge higher interest rates. And having no credit score at all will compound those issues even more – finding a loan with no credit history or a personal loan with bad credit is difficult (but possible!) and costly.

Speaking of no credit history, it’s also important to know the difference between having no credit and having bad credit. Learn more about the two in our guide: No Credit History vs Bad Credit: What’s the Difference and How Do You Fix it?

In any case, good credit is necessary if you need to use credit to make a major purchase or expense, such as a home or college tuition. Good credit can also make you a better applicant when wanting to rent a home.

5 ways you can establish credit

There are many ways you can establish and build your credit score. Here is our list of the top 5 ways you can establish credit.

1. Get a Secured Credit Card

A secured credit card is used just like any other credit card, however, it is approved through a cash deposit that you pay upfront. This deposit then becomes your credit limit. Secured credit cards are great for those new to credit since it can build credit for those who wouldn’t likely be approved by an unsecured card.

2. Get a Credit Builder Loan

A credit build loan is a loan for those looking to build credit. These loans are placed in a savings account on your behalf which you pay off in monthly payments. After the loan is paid off in full, you will receive the money in the savings account to keep. This option allows you to build credit as well as your own personal savings.

Paying off a loan like this shows creditors that you have a history of making financial decisions responsibility and will build your credit score.

3. Find a Cosigner

A cosigner can make you eligible to get a low-cost loan or an unsecured credit card despite not having any credit history yourself. However, the cosigner is often required to meet high standards such as being a US citizen and having a high credit score themselves. A cosigner will also become responsible for any debts you incur if you end up not paying them back yourself. Finding a cosigner can be difficult but well worth the trouble.

4. Become an Authorized User

Becoming an authorized user on a credit card allows you to build a credit history without having a credit card account yourself. An authorized user is someone who is added onto another person’s card who is allowed to make purchases with the card but is not responsible for making the monthly payments on the card.

Oftentimes a family member or significant other may be willing to add you as an authorized user on their card if you choose to not open a card yourself.

5. Use Rent Records as Credit

Paying your monthly rent on time demonstrates your strong financial behavior and can be used by credit agencies to determine your credit eligibility. By using a rent reporting service, your monthly rent can be factored into your credit report which will help build your score. You can learn more about this strategy here.

These, of course, are not the only strategies for building credit. If you have student loans, there are more ways to explore.

5 Good Habits to help Build your Credit

Raising your credit score is best done by setting good habits for yourself to show a history of strong financial responsibility. Here are just a few habits you should be doing in order to build your credit.

1. Make Payments on Time

All of your monthly payments, such as rent, utility, credit card, and loan payments, should be made on time. Unpaid bills can be sold to a collection agency which will be detrimental to your credit score.

2. Don’t Use Too Much Credit

Credit utilization is how much of your credit limit that you use each month. By keeping your credit utilization low, creditors will view you as a safer borrower, and this will pay off in your credit score. Keeping your credit utilization low can be done by paying off your balance in full and keeping your card balance less than 30% of your total credit score.

3. Don’t Open Too Many Accounts

New accounts lower your average account age which is used to determine your history of credit. Since having a longer credit history is better for your credit score, try to avoid opening too many accounts at once.

4. Maintain Accounts

Along with the previous tip, you should also keep your accounts open for as long as possible. This keeps your average account history higher, and therefore leads to a higher credit score.

5. Review Credit Reports

You are able to get your credit report for free once a year for each of the three credit reporting agencies: Experian, Equifax, and Transunion. By checking these reports, you can check for any discrepancies that may be negatively affecting your credit score.

What are credit reports?

A credit report details your credit history. These reports are provided by three major credit bureaus: Equifax, Experian, and TransUnion. These credit bureaus take in your bill paying habits to create your credit report and give you your credit score.

How to check a credit report

You are able to receive a free credit report once per year thanks to the Fair Credit Reporting Act. You can do this by going to where you can access all three of your credit reports from the credit bureaus.


Credit is a big financial aspect when living in the US. There are countless times where you may be asked for your credit score, whether that be when applying to rent a home, or applying for a loan to help pay for your college tuition.

Since credit is such a big factor in many of these instances, building your credit early is key to securing your financial future. As always, here at Stilt, we strive to help you with any of your financial questions and we hope this article has helped you take the first steps in building your credit.

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Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.